Environmental Benefit-Cost Analysis: A Comparative Analysis Between the United States and the United Kingdom

Joseph E. Aldy, Giles Atkinson () and Matthew J. Kotchen
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Joseph E. Aldy: Harvard Kennedy School, Harvard University, Cambridge, Massachusetts 02138, USA
Giles Atkinson: Department of Geography and Environment and Grantham Research Institute on Climate Change and Environment, London School of Economics and Political Science, London WC2A 2AE, United Kingdom
Matthew J. Kotchen: Yale School of the Environment, Yale University, New Haven, Connecticut 06511, USA

Annual Review of Resource Economics, 2021, vol. 13, issue 1, 267-288

Abstract: The United States and United Kingdom have long-standing traditions in the use of environmental benefit-cost analysis (E-BCA). While there are similarities between how E-BCA is utilized, there are significant differences too, many of which mirror ongoing debates and recent developments in the literature on environmental and natural resource economics. We review the use of E-BCA in both countries across three themes: (a) the role of long-term discounting, (b) the estimation and use of carbon valuation, and (c) the estimation and use of the value of a statistical life. In each case, we discuss how academic developments are (and are not) translated into practical use and draw comparative lessons. We find that, in some cases, practical differences in E-BCA can be overstated, although in others these seem more substantive. Advances in the academic frontier also raise the question of when and how to update practical E-BCA, with very different answers across our themes.

Keywords: benefit-cost analysis; social cost of carbon; social discount rate; value of statistical life; regulatory impact analysis (search for similar items in EconPapers)
JEL-codes: H43 Q51 Q54 Q58 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1146/annurev-resource-040821-045913

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